It was announced this week that the Endorsed Supplier Arrangement (ESA) would cease.
In announcing the decision, Senator Richard Colbeck, Parliamentary Secretary to the Minister for Finance and Administration, promoted it as a move to "remove red tape and open up the Australian Government office equipment market".
Senator Colbeck stressed that in recognition of the effort suppliers made to achieve ESA endorsement, they would be able to continue to use the ESA logo until the end of September 2007.
The ESA scheme will be replaced by an ICT multi-use list (ICTMUL). ICT suppliers will be able to register on this voluntary list. They will no longer be required to acquire and retain insurance at arbitrary levels, to undertake financial viability assessment, or to maintain performance guarantees.
Endorsed suppliers in the ICT and major office machines sectors will automatically have their details transferred to this list.
The ICTMUL provides much less supplier information than was available in the ESA list, which (at least to some extent) allowed agencies to identify possible suppliers of the solutions they were seeking, based on the supplier's descriptions of their offerings. Instead, the ICTMUL product and service categories are very broad. For example, there is only one category for software, "computer software". It seems unlikely that this will be useful for potential solution identification purposes. The ICTMUL's only likely purpose therefore will be to identify the ICT companies with an interest in the Federal Government market.
The announcement to scrap the ESA was welcomed by the Australian Information Industry Association (AIIA). "Under the ESA scheme, suppliers were obliged to invest considerable time and money to get a playing card, with no guarantee of a game," said Sheryle Moon, AIIA's CEO.
According to the AIIA, this resulted in some suppliers, particularly smaller companies, choosing not to seek government business at all - with the cost of insurance requirements simply too great when there was no guarantee of business to follow.
Introduced 12 years ago, the ESA was a pre-qualification scheme that endorsed suppliers who wished to sell into the Federal Government.
However, although agencies were encouraged to utilise the endorsed supplier list to identify potential suppliers, they rarely did so. Many agencies purchased from suppliers that were not endorsed. Agencies also imposed rigorous qualification requirements in tenders, effectively duplicating the ESA process.
A further problem was the failure of suppliers to keep their ESA details up-to-date. In fact, once they achieved ESA status, there was no requirement for suppliers to update their financial or other information.